How to Form an LLC in Ohio

Last Updated on April 22, 2024 by Dr. Gabriel O’Neill, Esq.

Embarking on the journey of starting your own Limited Liability Company (LLC) in Ohio can be an exciting and rewarding venture. Establishing an LLC provides a flexible business structure that combines the liability protection of a corporation with the simplicity and flexibility of a sole proprietorship or partnership. 

To help you navigate the process, this guide will provide a concise overview of the essential steps involved in starting an LLC in the state of Ohio.

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8 Steps To Start an Ohio LLC

1. Selecting Your LLC Business Name

Before establishing your LLC, it’s vital to ensure that your chosen business name is distinctively yours. In Ohio, new LLC names must be unique and distinguishable from other registered business or trade names in the state. 

To check availability, utilize the official Ohio business entity search on the Secretary of State website. If the desired name is available, you can reserve it for up to 180 days. This can be done online or by submitting Form 534B, the Name Reservation form, with a fee of $39.

Naming Requirements in Ohio   

Ohio’s Secretary of State maintains a list of approved business names, and new entities forming an LLC must choose a name that’s “distinguishable upon the records in the office of the Secretary of State.” 

This means it should not resemble the names of existing corporations, limited liability companies, limited liability partnerships, or other entities in Ohio. Additional considerations include:

• Businesses wishing to include “bank” or “trust” in their name must obtain permission from the Ohio Department of Commerce’s Division of Financial Institutions.
• LLC names should include “limited liability company” or an abbreviation like “LLC” or “Ltd.”
• If the Secretary of State rejects your LLC formation request, the office will reserve your canceled entity’s name for a year, allowing time for corrections without the risk of another entity using the desired name.

It’s crucial to thoroughly research and understand LLC naming requirements to prevent delays in approval or potential obstacles to forming your new business.

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2. Appointing an Ohio Statutory Agent

After finalizing your LLC’s name, the next crucial step is to designate an Ohio statutory agent. 

A statutory agent is an individual or business entity responsible for receiving important tax forms, legal documents, notices of lawsuits, and official government correspondence on behalf of your business. Think of your statutory agent as your business’s point of contact with the state.

Key Points Regarding Statutory Agents:

• Your statutory agent must have a physical address in Ohio and be available during regular business hours.
• The agent’s address is publicly accessible, so it’s essential to choose someone reliable and trustworthy.
• A statutory agent can be a resident of Ohio or a corporation, such as a registered agent service, authorized to transact business in Ohio.
• You may elect an individual within the company, including yourself, to serve as the statutory agent.

The statutory agent’s role is vital for legal compliance, as the state uses this contact for official communications. When designating a statutory agent, consider their availability, reliability, and the importance of having a consistent point of contact with state authorities. 

This ensures that your LLC stays in good standing and promptly receives any essential communications from the state of Ohio.

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3. Submit Formation Documentation to the State

Once you have addressed your business name and appointed a statutory agent, the next step is to formally register your Ohio LLC. You can initiate the formation process either online or by submitting Form 610, known as the Articles of Organization for a Domestic Limited Liability Company. The associated filing fee for this process is $99.

If you prefer the online route, access the Ohio Secretary of State’s business filing portal. Alternatively, you have the option to download the necessary documents and mail them to P.O. Box 670, Columbus, Ohio 43216.

Send the completed forms to P.O. Box 1390, Columbus, Ohio 43216, for expedited service, with an additional $100 charge for a two-day service. Faster processing options are also available for an extra fee.

4. Submit Articles of Organization 

In accordance with Ohio Revised Code Section 1706.16, the initiation of an LLC’s legal operation requires the submission of Articles of Organization to the Ohio Secretary of State. This paperwork can be filed by one or more individuals, and it encompasses both required and optional elements.

Required Components in Articles of Organization

Business Name: Provide the complete and accurately spelled entity name, accompanied by the inclusion of either “Limited Liability Company” or approved abbreviations such as “LLC,” “L.L.C.,” “Ltd,” “Ltd.,” or “limited.”

• Statutory Agent: Specify an original or appointed statutory agent. If a member of the LLC assumes this role, certain details, including their name and address, become public record. The appointed agent must sign and accept the responsibility.

• Statement: If applicable, indicate in the articles whether the LLC comprises one or more series of assets. Additionally, the Articles of Organization may include other pertinent information deemed important by an owner or member.

Optional Inclusions in Articles of Organization

• Effective Date: Instead of using the filing date, specify a chosen date for the LLC’s establishment to take effect.

• Purpose: Optionally, articulate the express purpose for establishing and associating the LLC with the business. If unspecified, a general purpose is assumed—”to engage in any lawful act or activity for which a limited liability company may be formed.”

Out-of-State LLCs: Registering a Foreign LLC in Ohio

Out-of-state LLCs seeking to operate in Ohio can register online or submit Form 617, Registration of a Foreign Limited Liability Company. The filing fee for foreign entities is $99, aligning with the cost for domestically formed entities in Ohio.

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5. Draft an LLC Operating Agreement

Crafting an LLC operating agreement establishes the operational framework for your business, outlining your strategy for progression and defining the decision-making process. While Ohio law doesn’t mandate operating agreements, they’re invaluable tools for guiding various aspects, from member voting power to day-to-day functions. 

Additionally, these agreements contribute to substantiating your company’s legitimacy and maintaining its good standing.

Key Inclusions in Your Operating Agreement

When formulating a fundamental operating agreement, incorporate details related to:

• Powers and Duties: Clearly define the powers and duties of LLC owners and members.
• Ownership Percentage: Specify the ownership percentage of each member in the LLC.
• Voting Rights and Responsibilities: Outline member voting rights, responsibilities, and financial commitments.
• Meeting Protocols: Detail the procedures for meetings within the LLC.
• Profit and Loss Distribution: Establish guidelines for the distribution of profits and losses among members.
• Buyouts and Dissolution Rules: Clearly articulate rules governing LLC buyouts and procedures for dissolution.
• Handling Member’s Death: Plan for the necessary steps in the event of a member’s death.

The comprehensiveness of your Ohio LLC operating agreement enhances the ease of business operations and facilitates a proactive response to anticipated changes.

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6. Obtain an EIN for your Ohio LLC

Secure a free Employer Identification Number (EIN) from the IRS, serving as a business identifier essential for tracking tax reporting. Essentially functioning as a Social Security number (SSN) for your company, the EIN is crucial for various purposes.

Why is an EIN necessary? An EIN is required for the following:

• Opening a business bank account for your company
• Federal and state tax obligations
• Hiring employees for your company

Where can you obtain an EIN? Business owners can acquire an EIN from the IRS at no cost after establishing the company. This can be done through online or mail channels.

FOR INTERNATIONAL APPLICANTS: An SSN isn’t required to obtain an EIN.

Mail to:

Internal Revenue Service

Attn: EIN Operation

Cincinnati, OH 45999

Fax: (855) 641-6935

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7. Address the Additional Legal Responsibilities of Your Ohio LLC

After the registration of an LLC, members need to focus on meeting ongoing legal obligations throughout the company’s existence.

Correct Filing Errors Swiftly

When rushing to complete your LLC filing, errors may occur, such as misspelling your business name or providing an incorrect address. Rectify any issues promptly by submitting a Certificate of Correction, or Form 612, with a $50 fee.

If you decide to change your statutory agent, use Form 521 for the transition, incurring a $25 fee.

Establish a Business Banking Account

Upon forming your LLC, it’s crucial to separate its finances from your personal assets for liability protection. An initial step is opening a business bank account.

When initiating a business account for your LLC, the bank will request additional documents to confirm its existence and legal status. Typically, these include your Articles of Organization, EIN, and a copy of your operating agreement. Ensure you have these documents and inquire ahead about any necessary forms to complete before your visit.

Apply for Business Licenses and Permits

Beyond your LLC filing, be aware of potential requirements for additional business licenses and permits from the Ohio Secretary of State. For example, conducting business from a fixed location may necessitate filing Form ST-1 to obtain a vendor license, costing $25. Some permits incur no charges. 

Conduct thorough research and contact the state if needed to ensure you have the requisite licenses and permits.

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8. Enroll with the Department of Taxation

If your LLC employs individuals or engages in the sale of goods, requiring the collection of sales tax, it’s imperative to register with the Ohio Department of Taxation. Complete the registration process online through the Ohio Business Gateway. 

Additionally, if your LLC is a “foreign LLC” registered in another state, you must submit your registration to operate within Ohio. Depending on your business’s nature and income, you may need to register for various state taxes in Ohio:

Sales Tax

If your business involves selling physical products, you generally need to obtain a seller’s permit from the Ohio Department of Taxation. Ohio’s base state sales tax is 5.75%, with the possibility of additional local sales taxes imposed by counties and cities up to 3%.

Employer Taxes

If you have employees in Ohio, you must register for Unemployment Insurance Tax through the Ohio Department of Job and Family Services. Additionally, sign up for Employee Withholding Tax via the Ohio Business Gateway.

Commercial Activity Tax (CAT)

Ohio LLCs with gross receipts exceeding $150,000 annually are obligated to pay the state’s Commercial Activity Tax. LLCs with less than $150,000 in gross receipts are exempt. Payment can be made online, or a return can be submitted by mail by May 10 of the current tax year.

Income Tax

• State:

Ohio employs a graduated tax structure for individual income tax rates, ranging from 0% to 4.797%, depending on your LLC’s income. State tax returns are due annually by April 18. Calculate your tax or find your tax bracket on the Ohio Department of Taxation website.

• Federal:

Report your federal income tax using either Form 1065 (multi-member LLC) or Form 1040 Schedule C (single-member LLC).

Hiring Employees in Ohio

If you intend to hire employees for your Ohio LLC, adhere to legal requirements:

• Confirm new employees’ eligibility to work in the US
• Report employees as “new hires” to the state
• Provide workers’ compensation insurance
• Withhold employee taxes
• Display workplace compliance posters visibly in your workspace

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How to Start an LLC in Ohio – Buyer’s Guide

The Revised Ohio Limited Liability Company Act of 2023

The Ohio Revised Limited Liability Company Act (2023) came into effect on February 11, 2022, introducing modifications to the filing and post-filing treatment of LLCs. Notably, this updated law allows LLCs to be established for either nonprofit or for-profit purposes without necessitating additional designations.

Key revisions include:

• Cancellation for Failure to Maintain Statutory Agent: Business owners must uphold a statutory agent as per the LLC Act. Non-compliance prompts state notifications for agent change or lapses in maintaining the role. Failure to update agent information within 30 days of notification results in the cancellation of the business’s registration by the Ohio Secretary of State’s office.

• Series Formation: The revised laws now permit the formation of a “series LLC” in Ohio. This LLC type operates in a tiered structure, with the topmost LLC owning the lower businesses. Each entity within the series LLC operates independently with its assets and liability protection.

• Management Structure: The Revised LLC Act eliminates the distinction between member-managed and manager-managed LLCs. The authority of LLC members is determined by details in the operating agreement and the submission of Form 613, the Statement of Authority, with a filing fee of $50.

LLC owners and members are advised to consult with their legal representatives to ensure a comprehensive understanding of all requirements and updates resulting from these changes.

How Much Does It Cost to Initiate an LLC in Ohio?

The total expenses for starting your Ohio LLC vary based on several factors. Although the standard fee is $99, expediting the process incurs additional charges. If you engage a statutory agent and later need to make modifications, separate paperwork and fees are also necessary. 

Self-Filing vs. Engaging an LLC Service

Choosing between filing on your own and hiring an LLC service presents a cost dilemma. While self-submission can save you money, opting for a local or national service can streamline the entire process. Some companies not only handle the paperwork but also serve as statutory agents for your LLC, create the company operating agreement, and even develop your official branding.

If you have the time and prefer a step-by-step approach to save money, the overall cost could range between $100 and $200. Opting for an LLC service might provide free assistance in the first year, with an anticipated annual fee from the second year onward. However, some services charge an upfront fee in addition to the expected filing costs.

It’s crucial to carefully weigh the additional services you may require beyond filing your LLC paperwork and assess whether the associated charges are justified. Many Ohio LLC owners choose third-party services to delegate the responsibility of submitting state documents and managing annual obligations, allowing them to concentrate on running their new business.

How to Terminate an LLC in Ohio?

There may come a time when you decide to dissolve your LLC in Ohio, whether due to the desire to conclude business operations or establish a domestic LLC in another state. Regardless of the reason, the process for dissolving the company is swift, involving the submission of Form 616. Both domestic and foreign LLC owners can utilize this form, with a corresponding filing fee of $50.

Ohio LLC Advantages and Disadvantages

When contemplating the establishment of an LLC in Ohio, you might find it more convenient or economically advantageous to form your LLC in an entirely different state. To assist in your decision-making process about whether starting a new business in the Buckeye State aligns with your goals, we’ve outlined some common pros and cons associated with establishing an LLC in Ohio.

Pros of Ohio LLC Formation

Several benefits accompany the formation of your business in Ohio:

• Affordability: The cost of filing LLC paperwork is below $100, applicable to both domestic and foreign entities. This represents a potential cost savings compared to some states where filing fees can be significantly higher, particularly for out-of-state businesses.

• Streamlined Process: Ohio facilitates the entire LLC formation process online, eliminating the need for manual paperwork submission. This efficient option enables you to establish your business in as little as two to three days, a quicker timeline compared to the two to three weeks typically required by mail.

• Local Support: Businesses created by Ohio locals can leverage a robust “buy local” sentiment prevalent in the region.

• Tech Startup-Friendly: Ohio hosts some of the nation’s most tech-friendly cities and has previously launched multimillion-dollar funding programs tailored for emerging tech startups. For new tech-based LLCs, the state presents significant growth opportunities.

Cons of Ohio LLC Formation

While there are notable advantages, there are also potential drawbacks to forming an LLC in Ohio:

• Limited Industry Diversity: One significant drawback is the scarcity of industries available for establishing your business. The lack of business diversity, coupled with reliance on a few dominant industries, may pose challenges for smaller LLCs if those industries face setbacks.

• Scaling Challenges: Scaling up your business often hinges on attracting talent. However, it may be challenging in Ohio to find and successfully hire the employees you need when competing with larger businesses, potentially causing growth stagnation for your LLC.

It’s essential to recognize that no location is perfect, and each potential drawback should be thoroughly researched and discussed with stakeholders to determine if Ohio is the optimal location for establishing your LLC.

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Our Picks of the Best-Registered Agent Services

ZenBusiness

Ease the burden of paperwork with ZenBusiness. This company provides a comprehensive range of LLC services, ensuring your business is established correctly with all necessary documentation filled out and submitted to the appropriate state government branch. While ZenBusiness charges for its services, customers attest that they receive excellent value for their investment.

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Northwest Registered Agent

Navigating the maze of state-mandated paperwork for a new business can be overwhelming. Northwest Registered Agent offers business services designed to assist entrepreneurs in finding the right documentation, completing it accurately, and submitting it punctually to the relevant government agency. 

Apart from helping with LLC formation, Northwest provides additional services, including registered agent services, that prove beneficial to new business owners.

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Incfile

For first-time business owners, Incfile offers a valuable resource library to guide them in determining the most suitable business structure. Beyond guidance, Incfile assists with documentation and filing processes, demystifying terms such as registered agent, articles of organization, and EIN. With a solid reputation and positive online reviews, Incfile is a trusted partner for business formation.

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How to Form an LLC in Ohio – FAQs

How Can I Establish an LLC in Ohio?

Upon selecting a business name, initiate the registration process for your LLC by submitting the Articles of Organization to the Ohio Secretary of State. This can be done through online submission, by mail, or in person.

Is There an Obligation to File Annual Reports for My Ohio LLC?

No, Ohio doesn’t mandate annual reports for LLCs. However, LLCs opting for corporate taxation must fulfill the commercial activity tax (CAT) requirement.

Do I Need Legal Assistance to Start an LLC in Ohio?

Legal counsel isn’t mandatory for initiating an LLC in Ohio. Nonetheless, consulting with a lawyer is advisable if you have inquiries about Ohio LLC legal requirements or recent changes, such as those outlined in the 2022 Revised LLC Act.

How Long Does It Take for Ohio to Approve an LLC?

The approval timeframe for an Ohio LLC varies. Typically, it takes two to three weeks for mail submissions and two to four days for online submissions. Expedited processing is available for an additional fee.

What Is the Process for Adding a DBA to an Ohio LLC?

To incorporate a DBA into an Ohio LLC, complete a Name Registration form, incurring a filing cost of $39. Ensure the chosen DBA is unique and not already in use during the registration.

How Can I Change the Ownership of an LLC in Ohio?

To modify the ownership of an Ohio LLC, complete a Domestic Limited Liability Company Certificate of Amendment or Restatement form and submit it with a $50 fee.

Is an Operating Agreement Required for an Ohio LLC?

While Ohio doesn’t mandate an operating agreement for LLC formation, creating one is generally recommended. Some banks may require an operating agreement before permitting the opening of business accounts for your LLC.

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